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Financial Crime: Anti-smoking and male-enhancement drug maker charged with fraud after months on the lam

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The late-night infomercials made lots of claims about the dissolvable oral strips being sold. Depending on the ad, Redwood Scientific Technologies
RSCI,
-42.73%

said they could help people quit smoking, lose weight or help men perform longer in bed.

“I used Prolongz last night and this morning, if you know what I mean,” claimed one man in a testimonial for the company’s homeopathic, male enhancement drug featured in one of their 30-minute infomercials

The claims about the effectiveness of Prolongz, homeopathic smoking cessation drug, TBX-Free and weight-loss strip, Eupepsia Thin, soon caught the attention of the Federal Trade Commission. After years of legal wrangling, a judge ruled that the California company had made false claims about the efficacy of the drugs, and ordered them to halt operations.

Then early last year, federal prosecutors secured a criminal indictment accusing the company’s head, Jason Edward Thomas Cardiff, 48, of fraud for allegedly charging customers over and over again for drugs they never asked for and for allegedly getting employees to destroy documents the FTC had sought as part of their probe.

The problem for prosecutors was that Cardiff had left the country, according to court documents, selling his house in Upland, California and moving to Ireland where he has dual citizenship with his daughter and wife, with whom he had run Redwood Scientific. 

The case remained under seal until earlier this week, when authorities had a stroke of luck: Cardiff returned to Los Angeles to visit his ailing 96-year-old father, according to court documents, and was arrested at the airport. They have sought to have Cardiff held without bail. He pleaded not guilty.

A message left with Cardiff’s attorney wasn’t immediately returned.

In court documents filed after Cardiff’s arrest, prosecutors detailed what they described as  a long-running cat-and-mouse game investigators had waged with Cardiff as they tried to determine how he ran his business while they say he tried to hide assets and destroy evidence.

What investigators say they determined was that Cardiff had routinely continued to charge the credit cards of customers who had bought Redwood Scientific’s drugs for strips they had never ordered. And when FTC investigators demanded documents about the business, Cardiff allegedly ordered them destroyed.  

“This indictment alleges a blatant ripoff that simply charged customers for products they never ordered,” said Martin Estrada, the U.S. attorney for the central district of California.

Meanwhile, investigators say they determined that Cardiff and his family had been living the high-life, riding in Bentleys, Porsches and private jets and spending on lavish vacations and private school tuition for their daughter. They allege Cardiff stashed money overseas and in accounts in his elderly father’s name.

Despite being under criminal indictment and a judge having ordered Redwood Scientific to cease selling its drugs, Cardiff continued to sell shares in the company as an over-the-counter stock and issue statements about its research on refining oral strip technology, according to filings with the Securities and Exchange Commission.

Shares in the stock have swung from as little as two-hundredths of a cent to 42 cents over the past 12 months. Shares plunged 42% to 16 cents on Thursday following news of Cardiff’s indictment.

In 2020, Cardiff was tied to an effort by a separate company VPL Medical, which secured a $20 million, no-bid contract to sell masks to the Department of Veterans Affairs in the early days of the Covid-19 pandemic, according to a ProPublica report. The deal was canceled after Cardiff’s role was revealed.

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